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Editor’s letter

By Verdict Staff
May 1, 2008

Not all about having a good
time

During a crisis people need to show they are in control, which
possibly explains why so many lessors are restructuring or pushing
through dramatic changes at present. There are several
examples of this in our news section on pages five to
seven.

There certainly is no harm in trying new ideas, however, even if
it means spending more money, or taking oneself out of one’s own
backyard once in a while. By this I mean doing more structured
deals, which is the case with a number of lessors, including Fortis
Lease and HSBC Asset Finance, and, secondly, doing more crossborder
deals and strengthening overseas capability.

UK lessors are doing more of the latter, partly thanks to recent
rule changes on foreign lending. What’s more, with Sweden and
France still allowing tax-based deals, and nearby friendly
countries like Belgium being a popular place to source money for UK
leasing deals, it is no wonder foreign deal-making looks a more
attractive option to the grimness of home where obsessions with
liquidity crises prevail.

Barclays Asset & Sales Finance,we report in this issue, is
intent on building overseas capability, and the Asset Based Finance
Association (ABFA) says its members are looking increasingly to
far-flung markets in Asia and Latin America. ABFA also made it
clear that a change of rules governing factoring and invoice
discounting in China would result in a flood of western factoring
specialists to the country. This current enthusiasm from ABFA
members largely stems from the fact that invoice discounters tend
to do well during a downturn, when borrowers need more upfront
cash.

The home front, however, should not be ignored. In our March
issue we reported on how 50 lessors may have lost some £70m from
the insolvency of an international company called Global EPP.
Lessors found it hard at the time to disguise their frustration at
being potentially duped by a scam – which Global EPP is accused of
perpetuating – as simple as multiple financing.

The fact Global EPP’s administration followed the liquidation of
several other important lessees, including Transrent and
Thornycroft 1862, is real cause for concern.Yet the sorry state of
affairs does not end there with reports that several commercial
vehicle lessors are facing write-downs following the entry into
administration of Scottish haulage companies, Ramage Distribution
and E Pawson & Son.

Meanwhile, the number of lessors closing their doors continues
to rise as a result of the credit crisis. Already we have seen One
World Leasing, and the UK asset finance arms of Kaupthing Singer
& Friedlander and Bank of Ireland, collapse. Last month was the
turn of motor finance lenders with one non-standard lender, Blue
Motor Finance, temporarily halting new business introduced via its
dealer partners and switching to being a brokerage. Also, Welcome
Car Finance, a sub-prime hire purchase specialist that is part of
the Cattles group, has stopped lending through dealer and broker
intermediaries. There are also unconfirmed reports of at least two
UK non-prime motor finance lenders having closed their doors to new
business.